IFLR 1000
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The last 12 months has seen the Lithuanian economy gradually stabilise. This steady shift is creating an environment that is increasingly conducive to mergers and acquisitions. Transactions have been on the rise with foreign investors feeling their way back into the market. However, market commentators have reported a dissonance between buy and sell side expectations. This has resulted in an increase in the pursuit of deals but a cap on the actual number of completed transactions. "Of course there is positive movement in M&A. There are more and more deals this year, three times more deals. The trend is more deals," one partner says. "There's a shift towards more deals. Even last year there was a number of deals made. It's about a 30% increase in the number of deals above $5 million and about a 20-30% increase from 2009. This year it's even more. It should be 50% more than 2010. It's growing," another partner says. A high proportion of deals took place in sectors such as pharmaceuticals, oil, agriculture, and confectionery. These were areas that were relatively unaffected by the crisis.

Without a doubt, the envisioned construction of the Visaginas Nuclear Power Plant is the most significant project on the market. Recently, Hitachi was selected as the strategic investor for this nuclear power plant project. "It's a commercial project but the main motive is independence from Russian gas. Energy independence is the main motive. It will be the largest project ever in the Baltics," one partner says, adding: "It's the national energy strategy's main objective. Renewables is secondary, but with EU targets this will increase. The political choice is for Nuclear Energy." Nonetheless, support for renewable energy is in place and there has been some transactional activity in wind power and to a lesser extent biofuel. Moreover, there has been an increase in interest and discussions centered on solar power. However, for the time being, the "nuclear and gas sector is leading, the short term perspective".

One of the salient features of the last twelve months has been the increase in private equity. Importantly, market commentators agree on two reasons to account for this trend. Firstly, private equity funds are looking to make successful exits. Secondly, there are still extant funds that had not been invested in the crisis and so investors are hunting for targets. To the latter end, we see much activity from Polish investors. "There are a few strategic Polish investments into Lithuania. There's potential for more deals involving Poland. Poles come here, Lithuanians go there," one partner says. Another stream of investment flows from the Jeremie (Joint European Resources for Micro to Medium Enterprises) initiative developed in cooperation with the European Commission. A number of funds have been created for financing SMEs (small to medium enterprises) in Lithuania and surrounding countries. Historically, Scandinavian investors have been the most engaged in the Baltics, but this has not been the case with private equity and strategic investors are still very much active.

Purely domestic deals are a rare breed in Lithuania. "There are very few domestic deals. It's very small. Usually, there are more with international aspects to the transaction. 90% of deals have some international aspect," one partner says. However, what becomes clear is that in Lithuania, there are strategic investors and purchasers looking to seize significant targets before the financial investors return with the high-ticket mandates.

Lawin continues to hold fast to its dominant presence in the legal landscape of Lithuania. The firm's place in the top tier is unchallenged and it has won the admiration of peers and clients alike for its ability to churn out consistent quality. "Lawin has a long history and are the biggest in Lithuania. They have active partners. They are one of the first big firms and have a big network with good clients and a large database," one partner says. Nevertheless, there has been speculation that the firm, suffered a dip in form of late. "Lawin has been less active last year but more active this year," says one competitor. With a spate of new recruits, the firm continues to build upon its already large team to enable it to have the capacity to take on the market's highest value and most complex instructions.

Clients who have turned to the firm are rarely left disappointed. "Lawin is much more clear and do this [being inventive] there," says one client. "The sale was among the largest Lithuanian business transactions. Their involvement was very professional and helped us very much with the transaction," another client says.

Of late, the firm continues to attract some high profile mandates. The firm advised Shareholders of key client Fermentas International on the €184 million sale of shares of Fermentas International, manufacturer and global distributor of enzymes, reagents and kits for molecular and cellular biology research, to Thermo Fisher Scientific, a leading life science company listed on the NYSE. According to the Prime Minister of Lithuania, Mr Andrius Kubilius, this was the largest private capital transaction in Lithuania in the last twenty years. Furthermore, the firm advised on the major €947 million merger of public companies Rytu skirstomieji tinklai and VST , two major Lithuanian electricity distribution companies listed on Nasdaq OMX, into one new public company Lesto, consequently also listed on Nasdaq. To this end, Lawin advised UAB Visagino atomine elektrine, a major shareholder of Rytu skirstomieji tinklai and VST and the merged public companies themselves. This was the largest merger in Lithuania in 2010.

Sorainen retains its place in the top tier thanks to another successful year, which has seen the firm involved in the market's most significant instructions. With three partners and three senior associates backed by a number of associates, Sorainen certainly has the manpower for M&A. This coupled with the firm's integration in the Baltics and Belarus makes the team a potent regional force. However, this appraisal is not unanimous among the firm's competitors. "They are in the market, but I'm feeling [others] are more active. I'm not sure how much their team is dedicated to M&A; They're less visible," one rival says.

Nevertheless, clients have been in no doubt as to Sorainen's quality. "It was a very good experience. They were very good at tasks at hand...flexible, hardworking, good standard of work," says one client, adding: "We got advice that was more business advice than purely legal. It helps when you go to a new country." Laimonas Skibarka and Raminta Karlonaite are individuals that have been drawn out for praise. "Mr Laimonas, he's a very good lawyer, a business oriented lawyer. Raminta Karlonaite, I recommend her to other companies," one client says.

In the last twelve months, the firm has been involved in some of the country's highest profile mandates. Sorainen is presently advising Hitachi as the strategic investor in the new nuclear power plant project in Lithuania. This is the largest project in the Baltic States since gaining independence. Once operational the Visaginas Nuclear Power Plant will add 1,300MW of low-carbon power capacity and will enhance the security of energy supply in Lithuania and the region. Additionally, the firm was involved in the largest completed acquisition of a Lithuanian company in the last year when it advised Lotos Petrobaltic in its acquisition of a controlling stake in the Geonafta group, the largest oil exploration and production group in Lithuania, from three financial investors. The firm also advised Mieszko in its €32 million acquisition of the Vilniaus pergale group, one of the largest Lithuanian confectionary producers.

"Sorainen is a very good firm. They have strength in M&A, Laimonas Skibarka is a dealmaker," one peer says.

This year, Bernotas & Dominas Glimstedt retains its place in the second tier. The firm has built itself a strong reputation over the years. Nevertheless, market commentators have noted that the firm has lost some traction in the market of late. "Bernotas is less active," says one partner, adding: "They're quite strong but falling down in activity". "Glimstedt have strong partners and strong portfolios but in the last three years, they're less visible," says another partner.

Clients, however, have praised the firm in no uncertain terms. "Excellent quality, excellent speed and we have a long term relationship," says one client. Another client says: "For us, it is very important to have legal advice that has a high level of trust connected to a strong local presence. Sometimes it is hard in these markets for us; these guys are one of the few possible people we could work with. We were very happy with the service; professional, competent, flexible and on a tough time schedule."

Head of the corporate department, Remigijus Jakutis, receives praise from clients and peers alike. "I like Jakutis, he's professional and experienced but relaxed," says one partner. "I worked very closely with one lawyer [Remigijus Jakutis]. He was very proactive, efficient and fast," says one client, adding: "Every transaction is unique and you need to understand certain drivers in the process, he was very professional in that."

In the last year, the firm advised a Swedish property company and its subsidiary Newsec on the acquisition of Resolution, a leading Pan-Baltic real estate management and consulting company. Furthermore, the firm advised Grigiskes in the acquisition of a majority stake in Klaipedos kartonas from Hanner. The firm also advised LitCapital Asset Management (for LitCapital Fund) and Mesinvest (for Business Angels Fund) on the structuring and incorporation of the respective funds. These were the investment structures established under the Jeremie (Joint European Resources for Micro to Medium Enterprises) initiative launched by the European Investment Fund.

A solid well established firm growing in stature, Raidla Lejins & Norcous continues to make strides toward the upper regions of the M&A table. Market commentators have been near unanimity in their observation of the firm's increased activity in recent times. "This year we're usually on the opposite side to Raidla," one partner says. "Raidla are quite active but I'm not sure if they are tier one," another partner says. Irmantas Norkus has been described as "visible" in the field. "Raidla's managing partner Norkus is good," says one peer.

Clients have been content with the firm's performance. "I'm very satisfied with all the work. It was in a timely manner and very professional. They had great business understanding and they explained in detail what they needed," says one client adding: "They were very fast and their English was very good. This is sometimes a problem in Poland and the Baltics."

The firm's growing reputation owes much to its ability to attract leading mandates. Raidla Lejins & Norcous advised Mediq on its €85 million acquisition of the Healthcare business of Oriola in the Nordics and Baltics. The deal makes Mediq the biggest Healthcare business company in the Nordic and Baltic regions. Additionally, the firm advised Central European Pharmaceutical Distribution, a division of Polska Grupa Farmaceutyczna, in the exercise of a put option agreement with the Lithuanian shareholder regarding the €25 million acquisition of the remaining 49% of shares in UAB Nacionaline farmacijos grupe. Furthermore, in private equity, the firm advised BaltCap on its proposed acquisition of up to 100% of shares in UAB Kelprojektas, one of the leading transport infrastructure engineering companies in Lithuania.

"They're good value for money. They're not expensive when compared to Western law firms," one client says.

Relatively newly merged firm, Tark Grunte Sutkiene continues to build market share. The firm has had a busy year and consolidates its position in the second tier. Market commentators have observed the firm's higher visibility and see the firm as a potential force in the future. "Tark is more visible but it is too early to speak of [a higher ranking]," one peer said. "Tark is active," says one partner, with another adding: "It is hard to choose...I judge from how they [firms] behave. Tark is good". "The younger partner is full of enthusiasm," one peer says.

The firm's ascendency is reinforced by client testimonies. "They have one of the best teams, quite professional, we're more or less happy," says one client. "[They're a] professional team with certain partners having expertise in certain areas; good value for money. They had quite reasonable commercial sense," says another client, adding: "We get along on a personal and professional basis." Clients have also picked out Marius Matonis and Jonas Pilkauskas for praise. "I have an excellent opinion of them. They're very good in negotiations," one client says.

The firm's pan-Baltic strength is growing as the firm attracts some leading mandates. Last year the firm advised shareholders of the Tiltra Group, including Invalda and NDX Energija, in the group's €400 million merger with Trakcja Polska, the leading rail infrastructure construction group in Poland. Additionally, the firm advised the seller, Hermis Capital (together with Amber Trust and Firebird Avrora), on the sale of a controlling stake in the Geonafta group, the biggest oil extraction group in Lithuania, to Lotos Group, a strategic investor from Poland. The firm also advised Thermo Fisher Scientific on all Lithuanian legal matters pertinent to the $260 million acquisition of Fermentas International, headquartered in Canada, and its nine subsidiaries located across the world including Lithuania.

The firm's dedication to its clients was brought to light. "I think they're very responsible and can work the night, weekend and holidays," one client says.

Market commentators have had mixed feelings with regard to Baltic Legal Solution's - Lithuania activity. "Baltic Legal Solutions is not active at all," says one partner. "They're bigger and they work for local clients. I don't remember the last time they worked on a deal with an international aspect," another partner says. Nevertheless, the firm's deal list allays such concerns. Led by Gintautas Bartkus, the firm is presently advising one of the key Polish companies, in the road / railway construction sector, on a €193 million acquisition of a group of companies in Lithuania acting in the road construction sector.

The late 2010 merger of Regija Borenius and Mackonis & Partners Lawway to form Borenius / Svirinas & Partners has given the new entity enhanced capacity in M&A with eight lawyers now primarily occupied by M&A matters. Nevertheless, the firm's competitors do not see it as a force on the market. "Borenius are not visible at all. They're trying to strengthen their position," one partner says, with another adding: "They did one or two deals."

With the aid of Borenius's Tallinn and Riga offices, the firm advised UAB CV rinka, in cross-border merger procedures in regard to companies operating in Estonia, Latvia and Lithuania. The firm also advised fuel retailer Alexela Oil in the sale of its Lithuanian subsidiary to Neste Oil.

Market commentators agree that Eversheds Saladzius is not particularly visible in the market. "It's a small practice... because of the brand name, from time to time it's on transactions. We saw it represent a Finnish energy plant," one partner says. "I've never seen Eversheds in five years," says another partner, adding: "Eversheds came here four years ago but the project was not successful. It's a small but quite competitive market."

The firm continues to advise Fortum, the Finnish energy and heat company alluded to earlier, with regard to the acquisition of a power plant in Kaunas city. Furthermore, the firm is advising Homburg and SNC-Lavalin with regard to the formation of a joint venture between the two and the acquisition of the cross-Baltic business.

Motieka & Audzevicius has secured itself a place in tier four this year after attracting a number of interesting mandates in the last twelve months. The firm is currently advising Tereos Syral in a €27 million cross border acquisition of a 50% stake in AB Amilina, a producer of starch holding 11% of the European starch market. Showing its multijurisdictional capabilities, the firm is also presently advising a Russian financial and industrial corporation in a €28 million acquisition of one of the major Belarusian retail chains. The transaction is carried out through an acquisition of shares of the UK holding company. Motieka & Audzevicius acts as leading counsel and coordinator of the UK and Belarusian local counsel.

Gencs Valters law firm is presently advising Kite Ventures, a Moscow based venture capital fund, which focuses on high tech and Internet investment in Europe and Russia.

The M&A practice of Law Firm VARUL is led by Marius Devyzis and advised Orkla Finans, a Norwegian real estate fund, on the acquisition of a logistic business and commercial properties in relation to the €25 million acquisition of the third biggest logistics centre in Lithuania, Megarenta, that is based in Vilnius.